Type II diabetes and obesity are associated with dyslipidemia, hyperglycemia and insulin resistance. Hepatic steatosis directly contributes to insulin resistance and non-alcoholic fatty liver disease (NAFLD). Recent studies have shown that bile acids not only are physiological detergents that facilitate absorption, transport, distribution and disposal of steroids, nutrients, vitamins, metabolites and xenobiotics, but also are signaling molecules that activate nuclear receptors and cell signaling pathways and play critical roles in regulation of lipid, glucose, and energy metabolisms. Alteration of bile acid synthesis impairs metabolic homeostasis leading to diabetes, obesity, and cardiovascular diseases. CYP7A1 is the rate-limiting enzyme of the bile acid biosynthetic pathway in the liver. In the liver, bile acid activates the FXR/SHP pathway to inhibit CYP7A1 gene transcription. In the intestine, bile acids induce a fibroblast growth factor 15 (FGF15, or human FGF19), which activates hepatic FGF receptor 4 signaling to inhibit CYP7A1. Bile acids are known to reduce serum triglyceride levels and play critical role in maintaining glucose and lipid homeostasis, however, the underlying mechanism remains unclear. Our central hypotheses are that CYP7A1 expression and bile acid synthesis are highly regulated by nutritional status to maintain glucose and lipid homeostasis, and to protect against diet-induced hepatic steatosis, obesity and insulin resistance. The Specific Aim 1 will study nutrient regulation of CYP7A1 in bile acid synthesis and liver metabolic homeostasis. We will study the mechanisms of glucose and insulin induction of CYP7A1 expression in wild type mice and streptozotocin- induced type 1 diabetic mice, genetic obese type II diabetic ob/ob mice, and insulin resistance Fxr-/- mice. The Specific Aim 2 will study the role of CYP7A1 in fatty liver, diabetes and obesity. We have shown that transgenic expression of Cyp7a1 in mice (Cyp7a1-transgenic mice) protected mice from diet-induced hepatic steatosis, insulin resistance and obesity. We will use mice deficient of CYP7A1 (Cyp7a1-/-) to study if bile acid deficiency will increase susceptibility to diet-induced obesity and insulin resistance. We will also cross Cyp7a1- transgenic mice to Fxr-/- mice to test if increased hydrophobic bile acid signaling is sufficient for correcting insulin resistance. The Specific Aim 3 will use a humanized CYP7A1 mouse model for studying human CYP7A1 gene regulation in vivo. This study will provide further insight into the molecular mechanism of regulation of bile acid synthesis in humans. This humanized mouse model will be used to study diet-induced obesity and insulin resistance, and may be used for screening therapeutic drugs for treatment of NAFLD, diabetes and obesity. The long-term objectives of this research are to elucidate the molecular mechanism of regulation of CYP7A1 and bile acid metabolism, and pathogenesis and treatment of metabolic diseases such as fatty liver disease, diabetes and obesity.